How to make your B&B dream a reality

Many people have dreams of throwing in the day job and moving to the countryside, growing their own veg, and setting up a bed and breakfast in an idyllic rural village or seaside town.

While being an unrealistic option for most, this quirky bolthole trend has upped the chances of it becoming a serious option.

It is easy to dip a toe into the hospitality industry via websites like Airbnb or Wimdu.

Increasing numbers of these sites are springing
up, essentially allowing you to rent out your house or flat while you're away on holiday or staying at a friend's. You also don't even need to leave if you don't want to - you can just let out a spare room.

They are designed for those who are new to
lettings or only want to let their home for a few weeks a year, although there are some professional bed and breakfasts that advertise through the sites.

The great thing is
that these websites actively encourage people to let out a caravan, boat or garden shed
- the quirkier, the better.

So, if you're feeling creative, there are
lots of opportunities to pull in the punters without having to vacate your home.

Cosy: Spruce up an old garden shed to provide a luxury retreat for guests

The sites make their money by allowing you
to list your house, or space, for free, and take a percentage from each
booking. Homeowners are insured against any accidental damage caused by
people staying in their property.

Your
home does not have to meet any particular standards if you are renting
it out, but obviously if it is untidy and dirty, you are unlikely to get many takers.

You also need to remember that the key to success is usually good feedback.

But, while Airbnb provides an excellent service in terms of publicity, safety measures and home insurance, all tax and planning obligations are left entirely in your hands. So, homeowners that take advantage of these services need to be careful they are
not breaking any rules.

For example, while it may not be necessary to get permission to rent out your home, there may be clauses in your home insurance. And, if you convert a garden shed or let paying guests stay in your caravan, there might be issues relating to change of use (read more about this below).

If you're a tenant, rather than a homeowner, it doesn't necessarily mean you are excluded from these sites - although obviously you will have to get permission from your landlord.

Neighbours can sometimes be the biggest hurdle. So if you are thinking of bringing in paying guests to your home or garden, make sure you think carefully about how you will manage this with other people living nearby.

DON'T FORGET TO CHECK OUT PLANNINGRULES

Handmade: Jonathan Melville-Smith built the treehouse himself

Jonathan Melville-Smith bought his first gypsy wagon from Yorkshire via eBay to provide extra space for guests staying at his home in Cornwall.

After he refurbished it himself, he was surprised by a request from a lodger to use the caravan as a long-term let.

He explains: 'I realised that people rent out quirky places because of the romance attached to it. When I was nine years old I made a platform in a tree and ever since then I've always wanted a treehouse, as did my children, so I finally built one. People love staying in it and they come from miles away - even internationally.'

But he issued a word of warning over planning, which he admits can be a 'grey area' and a complicated issue. Jonathan thought that because his let was a caravan and not a building it would be fine, but despite his idea proving hugely popular, neighbours have complained about the extra people staying on his land and he is struggling to get change of use planning permission.

He said: 'Because the caravan is on wheels you wouldn't have thought it needed planning. But they are threatening to close us down because our neighbours don't like the extra people.

'It's a very grey area and we are trying to find ways around it because we are bringing business to the area.

'Apparently you need to apply for change of use. If the neighbours complain you have a problem.'

Is this all worth it and what could you make?

Before you start, it's worth thinking about your motivations for letting out a space in your home or garden to guests.

It can be a bit of a minefield working out planning or tax obligations, and your insurance costs are likely to rocket.

This is because there is no on-size-fits-all option. Some people may be able to get away with minimal changes but others will have to stump up a substantial amount of money.

As Liz Gowan, who rents out a caravan in her back garden, says: 'It is
quite complicated. Setting up was not at all easy and there are so many
issues to consider.

'Also it is not really a money spinner and I
wouldn't dream of advising it to anyone who seriously wanted to make
money. It has only really been feasible because my partner has been able
to put in the bathroom and cabin himself, using reclaimed materials.
Even so, insurance is a problem and very expensive.'

In fact, a specialist website that handles
converted timber shacks says it is struggling to keep up with demand. The site, Unique Home Stays, lists 37
two-man boltholes, around half of which are located in the popular
tourist areas of Cornwall and Devon.

HOW ABOUT A HORSEBOX?MAKE YOUR BUSINESS STAND OUT

Paradise: Would you want to spend your summer holiday in Canopy & Stars' Tree of Life Horsebox?

Tom Dixon, managing director of Sawday’s Canopy & Stars. strongly believes that to become a success, you must offer something a little extra to stand out from the crowd.

He says: 'In general, travellers are starting to look for more experiential holidays. They want to try something different, something that’s a million miles from what they do in normal life. People really do enjoy getting back to nature and a more relaxed kind of holiday, but we all like a bit of comfort too.

'Holidays are so precious we almost want to combine all the best bits of different types of holidays – great food, a good night’s sleep, peace and quiet, cooking on campfires, romance and adventure.

'It’s easy to just buy a yurt, bell tent or shepherd’s hut. But the experience generally asks for a bit more than that, so we very much promote what’s outside as much as what’s inside - a great location, lounging space outside and campfire are considered basics. Wood-fired hot-tubs, hammocks in trees and outdoor pizza ovens are the next step along.

'Our horseboxes cost anything from £500 for a really basic box on eBay to up to £25,000 for something that’s totally refitted. It really does depend on build and design aspirations and how much work you can do yourself. Paying someone to renovate a horsebox isn’t going to be cheap. But that’s not really the point, lots of owners want to create something themselves that’s a bit unusual, it’s is a big part of the appeal. Just look at shows on TV like George Clarke’s Amazing Spaces.

'Returns entirely depend on what you build and how big your garden is. In the right setting a beautiful shepherd’s hut that might cost £10,000 to buy could generate lettings greater than this each year. A treehouse that costs £70,000 could achieve a similar return in sales each year. There are of course costs, but it can certainly be a great way of making extra money and for some of our owners it is very much their full time job.

'But it’s not just a question of putting up a structure and expecting it to do well. You need a great setting, location, idea for what you want to do and then you need to create something special by working with great suppliers - and of course excellent marketing too.

'Public liability insurance is
required and most sites will require planning even if it’s within the
curtilage of garden, unless you’re planning a pop up for less than 28
days. We’d always suggest getting the advice of a planning consultant.'

Beware the rules

Although you won’t need a specific licence or
qualification to open or run a B&B or guesthouse, as well as obvious things like fire exits and smoke detectors there are areas of law you'll
need to be aware of.

So,
whether you want to put a caravan in your back garden, convert a shed
into a guesthouse, buy a yurt or rent out rooms in your house, you will
need to think about all of the below to a greater or lesser degree.

Where to start

You can either go down the DIY route or enlist the help of a professional. Ideally you, a family member or friend will be able to refurbish a guest-house to be, which will help to drive costs down.

Don't forget - bargaining can work. Offer free holidays in the finished product in return for wiring or plumbing help.

If you don't already have a shed, caravan, or spare room, eBay is a good place to find old gypsy caravans, horseboxes and sheds for bargain prices. Alternatively, companies like Tree Top Builders can help you through the design process and make and install the finished product for you.

Search around online or ask for recommendations.

Fancy: Unique Home Stays offers luxury boltholes

Planning: what do you need?

There's no point in wasting thousands of pounds of your hard-earned cash on a project your local authority is never going to permit.

It is almost certain that even for a new shed or caravan in the garden you will need change of use permission from the council. The same is true of existing buildings adjusted to let. Simply sticking something on your land and letting it is likely to lead to trouble.

So, before you put any concrete plans in
place, make sure you have done everything by the book - especially if you live in a tourist hotbed because the local council is likely to have a tourism plan and people checking up on illicit B&B operations.

TOP TIPS: CONVERTING A SHED

Although many sheds already contain wiring for a light or two, a guesthouse also needs several electrical points.

If the shed does not have any windows, plan to install at least one. Two windows, placed opposite each other, provide for extra light and the movement of air. The shed may also need a window air conditioner for the summer and a space heater for the winter.

Put in any plumbing pipes before beginning insulation.

Install insulation in the walls and ceiling; many sheds have open framing, making this part of the job easier (if the wall and ceiling studs are already covered, think about applying blown-in insulation).

Once the electrical, plumbing and insulation is in place, you can close up the walls and ceiling with paneling or drywall.

You may choose to install a bathroom or even a small kitchen in the guesthouse. These require not only a water supply but also a way to safely and legally dispose of sewage.

All extensions or
significant alterations will need appropriate planning permission from the local
authority, which can take several weeks to process.

You will also probably need to apply to your
local planning office for a change of use of your caravan, shed or property.

Even if you just want to let your home while you're on holiday it is worth checking with the council.

Some don't allow short-term lets without permission, so as to protect neighbours from
potential noise and disruption.

For example, according to Westminster
council you need permission if you want to let your property for less
than 90 days. If you don't you could be fined up
to £20,000.

Tax: Don't forget to pay

The big one you need to remember is
registering with HMRC for tax purposes.

When you start renting out property, a caravan, or even a tent, you must tell HM Revenue & Customs (HMRC) and you may have to pay tax, after deductions for allowable expenses. If you don’t, you could be charged a penalty.

If it’s less than £2,500 a year, call the Self Assessment Helpline (0300 200 3310) and ask for form P810.

You can run your business as a
sole trader, which means you wouldn’t have to register as a limited
company or open a separate business account.

However, you must register
as self-employed within 100 days of starting to trade, and you will need
to keep meticulous records of all business-related income and
outgoings.

If you are only letting out a room
or a floor rather than your whole property, you should be eligible for
tax relief on any money that you earn.

Under
the government's Rent a Room scheme, you can earn up to £4,250 a year
tax free from renting out your spare room. This applies whether you rent
or own your home, although if renting you will need to confirm that
your lease allows a lodger.

'MY GARDEN SHED HAS BECOME A £3,200-A-MONTH MONEY-SPINNER'

Garden house: Kerrie makes £3,200 a month from her shed.

What started out as a showroom
for her interior design company ended up becoming a real money maker for
mother-of-two Kerrie Griffin-Rogers.

She spent just £10,000 turning a roofless, disused garage at her house in Shropshire into a £3,200 a month retreat.

The 46-year-old had found herself struggling to pay the bills and her large mortgage.

What about your mortgage lender?

Different providers have different rules, so make sure you check the small print.

Halifax, for example, says borrowers need permission to let out their property, including guesthouses in the garden, otherwise they will be in breach of their mortgage terms and conditions.

Lauren Jones, of Halifax, outlines some of their rules

Renting out a room

Borrowers are required to notify us of their intentions to rent a room out to a lodger. Our policy permits up to two spare rooms being used for lodgers on the basis that their occupancy remains in keeping with that of the 'family' use of the property in that they would not be living in self contained areas of the property.

Income from paying lodgers will not be taken into consideration when the borrowers' affordability to repay the mortgage is being determined. Separate advice should be sought on the tax, legal and insurance implications of having a lodger.

Letting out the property

Residential mortgages are designed for customers who are currently living in their homes. If their home is to be let, consent must be obtained from the bank. If consent is not sought, the homeowner will be in breach of the mortgage terms and conditions.

There is no guarantee that consent will be granted as each decision on a case by case basis.

Holiday letting

For all Lloyds Banking Group brands; if you already have a residential mortgage on your main residence and wish to let the property (or part of the property) as a holiday let then as long as it for less than 16 weeks per year then no change is required. If it is for more than 16 weeks then you will be required to have a consent-to-let. This also applies for second home loans, where a customer buys a second home to live in and uses it as a holiday let.

If a borrower is purchasing a property with no intention of residing there then you would only the borrower would need to apply for a buy-to-let mortgages.

Shed or caravan

When it comes to a converted garden shed or a caravan in the property's grounds, each case would need to be reviewed individually.

There would also be clear legal considerations that would need to be taken into account, such as the basis for the occupation and ultimately whether the occupier would have any future rights over the land etc. Additional tax and insurance advice would also need to be sought.

Other lenders are more flexible. But the golden rule should be always to check with your mortgage provider.

Moneymaker: You could even spice up an old vintage camper van (Majestic Bus, Canopy and Stars)

Insurance: how to make sure you are covered

Most insurers will continue to provide cover as long as the letting has been organised through an agency, although they may put extra restrictions and limits on the level of cover offered due to the increase in risk.

A spokesperson for specialist insurance provider RIAS said: 'It’s important for all consumers to notify their current home insurance provider as soon as possible about any changes which may affect their home buildings and/ or contents policy, at any point during the policy. This will ensure that if any terms and conditions need to be applied to the policy, the customer is made aware and can accept them, so that the policy can continue to meet the customer’s needs.

'Some examples may include letting the entire property, or a room within the property to a tenant or lodger, either temporarily or on a more permanent basis. If a customer wanted to let their home out whilst they were on holiday, this would be considered on a case by case basis and any cover would depend on a range of factors including the duration of the holiday let, the prospective tenant and the type of insurance cover required.

'People who let out caravans in their gardens would be unable to obtain a home buildings or contents policy from RIAS.'

However, other insurers, like HIC for example, provide cover for private static caravans being rented out to guests.

You will also definitely need specialist
insurance to cover you for things like public liability, in case a
guest injures themselves and take action against you.

Quoterack,
Premierline Direct and John Pieri all offer specialist B&B policies,
and you’ll find other niche insurers by using an internet search
engine. Direct Line can put together individual guesthouse insurance policies.

Spend an afternoon ringing around for
quotes, or you could speak to BIBA – the British Insurance Brokers
Association, who can point you in the direction of some suitable
specialist insurers.

Aim high: The market for luxury tree house holidays, like the Canopy and Stars Harptree, is booming

Gas and safety

Whether you are renting out a room, property, caravan or conversion, you must have a
landlords gas safety certificate. You will
need a LPG Gas Safe Registered engineer to do this.

You should also get any
portable electrical appliances that you supply inspected and tested (A
PAT test).

Will you serve food?

By definition, B&Bs involve serving
food. Those that decide to run a full service, rather than just accommodation, will need to follow rules on food safety.

It’s worth getting
the environmental health officer round to inspect your kitchen very
early on in the planning process as you may find you need to make some
alterations which could affect your budget.

You can obtain most of the information you need from the Food
Standards Agency.Food
business operators must register with the local environmental health
department, including all bed and breakfast and guest house businesses.
Previously,
it was only necessary to register if there were more than three bedrooms
for guests, but this has changed under the new EC regulations and now
all bed and breakfast and guest houses have to register. There is no fee
to register and a registration form is available on request or on line.

Depending on what kind of B&B you
plan to run, there may also be some licences you need to apply for in
order to provide certain services such as serving alcohol, playing music
or providing a television.

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